Shareholders and Stakeholders: Human Capital and Industry Equilibrium
AbstractProducing high technology output and supplying sophisticated services often involves costly investment in industry-specific skills. But the threat of poaching means that it is the individual ‘stakeholder’, not the firm, who must bear the cost. We investigate various mechanisms for funding human capital investment in an industry equilibrium framework where capital market imperfections would (in the absence of intervention) result in underinvestment. The main result is that government provision of loan guarantees (conditional on no-bankruptcy) leads to wage hikes which (by forcing exit of some firms thus increasing monopoly power) raise profits in a socially inefficient manner: income contingent loans and levy subsidy schemes, meanwhile, can result in a socially efficient outcome.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1719.
Date of creation: Nov 1997
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Other versions of this item:
- Miller, Marcus & Ippolito, Roberto & Zhang, Lei, 1998. "Shareholders and Stakeholders: Human Capital and Industry Equilibrium," Economic Journal, Royal Economic Society, vol. 108(447), pages 490-508, March.
- Miller, M. & Ippolito, R. & Zhang, L., 1997. "Shareholders and Stakeholder: Human Capital and Industry Equilibrium," The Warwick Economics Research Paper Series (TWERPS) 481, University of Warwick, Department of Economics.
- D41 - Microeconomics - - Market Structure and Pricing - - - Perfect Competition
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
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- Booth, Alison L & Francesconi, Marco & Zoega, Gylfi, 1999. "Training, Rent-Sharing and Unions," CEPR Discussion Papers 2200, C.E.P.R. Discussion Papers.
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